So you finally made the leap — you’re a small business owner. If you’re in retail, you’ve got the building, inventory, and employees. If you’re a service provider, you’ve done a few jobs, and clients are beginning to line up. Either way, you want to keep accurate records of your business finances. Manually entering all of your transactions with a journal and ledger system is time-consuming and prone to errors. Regardless of the type of business you own, you can benefit from learning how to use accounting software.
What are the Benefits of Accounting Software?
With small business accounting software, you can:
Manage cash flow
Maintaining accurate Accounts Receivable entries means you always know how much your customers or clients owe you. Whether you have an across-the-board policy of Net30 or a combination of Net30, Net60, or Due Upon Receipt policies for different clients, this type of software gives you an accurate snapshot of your current cash flow.
Net30, Net60, and Net90 are accounting terms that refer to the number of days your client or customer has to pay their account in full. A Due Upon Receipt invoice means your invoice is owed to you the moment your client receives it, notwithstanding a reasonable amount of time to acquire and send the money. Accounts Payable refers to tracking what you owe to your vendors.
A business has many obvious expenses, such as supplies and materials, but also more subtle ones, such as vehicle mileage and maintenance, fuel costs, and billable hours for a job or employees’ hours worked. With accounting software such as QuickBooks Online, you can manage all these aspects of your business from one convenient dashboard.
Manage payroll, if you have employees
Office morale goes up when your HR and Payroll departments have access to online small business accounting software that lets them do their job even when they can’t get to the office, and QuickBooks lets you easily add payroll to your suite of tools.
Instead of waiting for a check to be mailed or accepting cash at your office, with accounting software tools you can accept payments via an online portal. Your customers pay with their credit or debit cards, and the money is sent to your synced bank account instantly. In fact, you can sync all transactions to your bank account. When one of your employees uses the company card for supplies at a local store, you have an instant record of the purchase.
Maximize tax deductions
Small business accounting software gives you a leg up during tax time. Save all your receipts in an expense tracking app to automatically file each expense according to category. When it’s time to file your taxes, QuickBooks can find all of the deductions you qualify for.
What Kind of Accounting Software Should You Buy?
What type of business do you own, and what’s your projected yearly revenue? To build a suite of tools tailored to your business, you need to highlight a few crucial items, such as the types of transactions you need to manage closely. No matter what type of business you own, you want accounting software that can integrate all the tools you need to successfully operate and manage your finances. If you sell products, you need to track your inventory, expenses, employee labour hours, payroll, and invoicing. If you provide a service, you need to manage your client information, the jobs you perform, and the invoices you produce.
Regardless of the diversity of tools your business requires, you can make invoicing seamless with the right accounting software. Good accounting software lets you set the default terms of your invoicing procedures and even set defaults per client. If the client for which you perform graphic design always pays on time, Net10 payment terms should suffice. For a client who frequently misses payments, Due Upon Receipt terms remind them they need to pay promptly.
Whatever terms you set for each client remain consistent in the accounting software unless you override them in special circumstances. Your ledgers automatically update as your clients or customers pay you. As time goes on, you can get a broader picture of your business health. Accounting software helps you catch potential mishaps faster than manual accounting, and you can even set your software to alert you when invoices due and invoices payable are nearing or past their due date.
How to Set Up Your New Small Business Accounting Software
Once you’ve chosen the QuickBooks software suitable for your business, you need to set it up. Doing so is pretty straightforward, as the software walks you through the important steps via onscreen prompts.
First, you have to choose a starting date for your entries. The beginning of the month is ideal. At the end of the month, your accounting balances transfer to the next month or cycle, and your ending balance for that month becomes your current balance for the next.
Next, you need to put together all your records from your business thus far. All receipts, invoices, and so on should be entered into the system. The accounts that most small businesses have are Accounts Payable, Accounts Receivable, and their main bank account. If your business is brand new, you won’t have any entries to record, and your starting balance is zero. As you enter transactions, or as transactions are entered automatically as items are debited from your bank account, the system reflects your account balances.
General ledger accounts summarize your transactions. Each transaction is also categorized depending on the type of transaction it is. QuickBooks Setup Wizard walks you through choosing your chart of accounts based on the standard type of business you own.
As your business grows, your transactions populate in your general ledger. If you’re not using automatic accounting software, you need to enter these transactions yourself. It’s best not to fall behind on entering these transactions, because you don’t want to overdraw from your bank account by accident. At the end of the month, you need to reconcile each account to ensure its accuracy. Once you have a complete set of transactions for at least one cycle, you can run reports such as cash flow statements or revenue statements that can give you an accurate picture of your current business financial status.
Can the Software Grow With Your Business?
As your business grows, you need accounting software that can keep up. The tools available with QuickBooks are efficient for any business, however big or small. Some of the tools you can integrate with QuickBooks include:
- TSheets for time tracking
- Payroll to streamline your payroll processing
- Self-Employed to help you manage your business finances and maintain CRA compliance
- Payments to let you accept payments in the cloud, which are credited directly to the bank account you choose
- Expense Tracking for end-of-the-year tax filing and year-round peace of mind
- Tax Deduction Maximization to automatically find the best deductions based on the expenses you claim
Running your own business is always going to have ups and downs, but, with QuickBooks accounting software and tools, you can enjoy having a clear financial picture of the business at all times. 5.6 million customers use QuickBooks. Join them today to help your business thrive.